$6.6 Million Ruling Against Lyrics Site, Once Again, Shows How Short Sighted Music Industry Is

from the makes-no-sense dept

For many years now, we've covered how music publishers have gone after all sorts of sites that post song lyrics, arguing infringement. As we've noted time and time again, this whole thing seems short sighted in the extreme. Lyrics sites don't take away from interest in a song, they only increase it. And, yes, publishers have different interests than the musicians or labels, but it still seems counterproductive to sue and take down sites that were increasing interest in the actual music, as lyrics sites do. Unfortunately, lots of lyrics sites have been forced offline because the rates the publishers want are insane. A few years ago, a bunch of publishers went after Brad Greenspan's LiveUniverse for its lyrics offerings. Greenspan -- who was associated with MySpace in the early days as its parent company Intermix's CEO -- has, well, a colorful history. He's spent many years stamping his feet about how Rupert Murdoch should have paid more for MySpace back in the day.

Unfortunately, colorful and extreme CEOs aren't necessarily what you want in a lawsuit that involves a number of important issues. From the look of it, Greenspan did a lot more harm to himself in this lawsuit with his actions, so it's little surprise that he lost and was told to pay $6.6 million a few weeks ago:

Greenspan went through three law firms. One withdrew, citing a "personality conflict." Another withdrew, citing nearly $85,000 in owed fees and a "breakdown in the attorney-client relationship." At times, he showed up in court, representing himself and failing to obey proper procedures in submitting motions. At other times, depositions were ignored upon "medical emergencies."

Later on, after the court ordered an injunction, Greenspan ignored it -- a big no-no. As a result, it's almost surprising that the final ruling was only $6.6 million. The judge, thankfully, more or less realized on his own that the $100,000 per song that the publishers were asking for was crazy talk. He specifically asked about what actual licensing rates would have been, "to avoid a ridiculously disproportionate damage award" -- even though statutory damages don't require any indication of "actual" damages. Of course, they still ended up with $12,500 per song for 528 songs, leading to the $6.6 million verdict embedded below.

The whole case, however, reminds us once again how shortsighted the legacy players in the industry are. They seek to get cash out of every single use, even if those uses make the overall work more valuable. The end result is fewer people engaging with lyrics. It's just too expensive, and that serves to generate less interest in the music as a whole. But, it gets some publishers a short term big check, and that seems to be the extent of strategic thinking in parts of the legacy industry these days: "how can we get them to pay us right now?" rather than "what actually makes the most sense?"

That may sound like an exaggeration, but it's not. Remember, when now-Sony Music (then Universal Music) boss Doug Morris basically made exactly that statement? When asked about increasing value to benefit down the road, Morris responded by telling a reporter that this just meant that:

"someone, somewhere is taking advantage of you."

The legacy music industry needs long term strategic thinking. And instead it just looks for who it can sue.

LMAO...

Good luck getting ANY publicly traded company to look beyond next quarters financial statements. With a fear of "shareholder lawsuits", HFT systems and a shareholder preference for short term profits over long term investment, it's doubtful any company would be willing to risk a long-term approach to growth.

When you've been trying to live off of the same "booty and bling" rap, generic butt rock, and teen oriented pop featuring lyrics that would make a wild west hooker blush since the late 1990s, you'd also resort to frivolous lawsuits and taking advantage of revolving door politics to make any money.

Statutory v. actual damages

statutory damages don't require any indication of "actual" damages.

Well, they're supposed to be related to actual damages; that notion has a long history in tort law. Obviously, actual damages are often hard to determine, but statutory damages are at least supposed to be in the general ballpark of actual damages (plus extra as a deterrent).

Unfortunately, none of that seems to matter in copyright cases, and statutory damage awards orders of magnitude greater than even theoretical actual damages are often granted. Usually judges don't even bother to ask what copyright holders for estimates of what licensing fees would be, for example.

It would be great if it were different, but that's just a reflection of the copyright-maximalist age we currently live in.

The real tragedy

The really sad thing about this is that the legacy industry can obviously see that lyric sites are popular and in demand and they have NOT tried to monetize a site of their own.

Bleeding lyric sites and services like Spotify is incredibly stupid when they own the "product" and could dominate the market.

The problem is greed. Consumers want low priced, convenient services and the industry wants the old CD revenue. They can't seem to grasp that hundreds of billions of digital dimes are just the same as millions of dollars.

Seriously

There is no value in the lyrics, we listen to a song and can write the lyrics down this case is a farce and is just another nail in the coffin for the music industry as a whole.
Yes they do not believe in looking forward or planning for the next few year even, they need money now before the whole house of cards comes falling down, they are grabbing as much as they can and getting the court decisions they are looking for, the problem they have is actually getting the awards from the business involved in spreading the lyrics. I for one would be paying the lawyers and maybe a few other costs and claiming bankruptcy. Very simple thing to do and the mega rich do it all of the time to get out of debt.
This is a sad day for musicians and the law as it just points to another stupid law that people will ignore.
And how the hell can you have a copyright on lyrics, that just does not make sense, they are in the songs people buy.

Re: Seriously

exactly, anon...
i don't listen to a lot of contemporary pop/rock/etc, but -at least 90% of the time- i pay near zero attention to the lyrics because:
1. most of the time you can't understand anything but the chorus, anyway...
2. don't often provide lyrics with the 'album'/cd anymore, so can't learn the lyrics, EVEN IF i wanted to...
3. i mean -c'mon- its freakin' pop lyrics, i'm going to learn something from 'ooo, baby, i love you, do you love me?' for the millionth time ?
4. for me -and i think for a lot of people- it is the 'sound' of the song, the lyrics could be gobbledygook (as they often are), and it will still be the 'sound' that catches our attention...
5. *IF* there are poetic, interesting, or profound lyrics associated with the song, that is one in a million...
now, the MAFIAA wants to make the lyrics even more irrelevant to the listeners...
way to promote your products, copymaximalists ! ! !

Re: The real tragedy

They wait for someone to come up with something new and cool that is years overdue... and then show up and demand 99.5% of the profits for "their" hard work.

Trot out some report about how the internet people are just robbing the poor artists blind, get a few of the legacy acts to talk about how they can no longer make a living because of these internet parasites.

oh so true! the reasons? it is able to, governments and courts actively encourage it to, it is so scared of anyone earning money instead of it, it is so scared it will have to do something new and/or different to earn money, it is afraid of joining the digital age, it is a much easier way of getting money than doing anything else!

Re:

So accurate it's not even funny. 99% of what the "music" labels put out today is pure and utter garbage, hence why they're so anxious to litigate, extort and lobby. After all, how can they build a successful business model on a steaming pile of dung?

Re:

Yes, The Legacy Music Industry needs to die.Wish I could see the day those A-Holes are all out on the Streets.
F#CK THE MAFIAA !
Boycott all MAFIAA Content !
Artists who sign with MAFIAA are Traitorous Scum.
Buy and Support Local and Indie Art !

How are lyrics not facts?

Sports statistics are facts and no one may claim originality as to facts. How are lyrics not facts? Fact: noun; A thing that is indisputably the case. Once the song is sung/recorded/published, how are the lyrics not a fact? They are what they are. New versions/recordings/performances of the song could change them but for that particular instance of a song the lyrics as facts.

"someone, somewhere is taking advantage of you."

Dear God, what a pitiful attitude. It reeks of a half-witted street-corner gangster, so addled with greed, stupidity, and hatred for anyone who doesn't knuckle under to his mob, that he cannot add 2+2 and get 4. Future generations will scream with laughter at the ludicrous, flailing antics of this bunch of witless buffoons, on being presented with the most incredible marketing opportunity anyone could ever dream of.

Frankly, the sooner this odious, corrupt rabble of thugs is consigned to the pit of history the better for all mankind. And for all their vicious sueing, bankrupting and imprisoning of potential customers and unpaid marketeers it is quite clear they have no hope of surviving even one more generation. Why on earth would any artist sign away life and first-born child to these repulsive, incompetent criminals when the internet beckons? Dinner with the wolf or manna from heaven? Even a chicken could figure that one out.

I once went to a concert featuring one of these artists who has been victimized by rogue lyric sites. He tried to sing, but unfortunately, all his lyrics had been stolen.

Many in the audience tried to help by singing the lyrics they had stolen, but it only seemed to make matters worse. He stormed off the stage, followed by his management who wordlessly mouthed something angry in the direction of the audience.

We were duly chastened and hastily returned home to blot out the purloined lyrics with vast quantities of alcohol and self-administered lobotomies.

Re: usual dribble

Re: How are lyrics not facts?

Yeah, I'm a bit confused about that too. Lyrics sites...it's kind of like someone writing down what someone sang/said out loud in public and passing it along.

The guy who ran the site doesn't seem like he's got a full deck and didn't help himself any, but the whole situation is just so dumb and petty and counter-intuitive that it breaks my head. The suers aren't fighting for anything that needs defending. They won money they won't get. They're cutting off lines of inquiry for those who are interested. And someone else did all the work of creating that easy access to answers for free.

I know it's a money grab, but it's stupid and shortsighted and grosses me out on a business-sense level.

Re: Shortsighted?

It may be shortsighted, but isn't it the right of a property owner to act in ways that are shortsighted with regards to his property and his best interests?

First: the economic rights granted by copyright are "property rights" in the same way as liquor licenses or taxi medallions are "property rights." It is an artificial monopoly granted by the government; and it is only granted by the government because it (in theory) provides an overall benefit to the general public. Copyright is supposed to accrue to copyright holders, as an incentive to create and distribute works that otherwise would not reach the public.

So, if the ability to sue (or shut down) lyric sites do not benefit the general public, that ability should not be allowed by law. It's hard to make a case that it is against the public benefit - especially since the lyrics alone, divorced from the music, have no value in the marketplace. Nobody that I know of sells the lyrics separate from the music.

Second: Even traditional private property rights have limits. You can't drive your car into the side of my house, no matter how shortsighted you are.

Re: This pisses me off.

Yep, the second option is why these sites should be truly useful to any label exec with their head not firmly lodged in their ass. They're helpful for people trying to identify a song. How can people buy the song if they don't know what it is?

Mind you, a while back I had a discussion here with a self-proclaimed musician who wouldn't accept that as a valid reason. According to him, anyone wishing to know the lyrics or identify a song should travel down to a store that sells sheet music and buy those, or ask a salesman to identify the song. When I pointed out that not only are most people not going to make such effort but many don't live near such a store in the first place, his attitude was literally "tough sh*t, don't buy the song then". I'm sure he would also be the first one to complain of dropping sales, too.

That seems to be the attitude of the major labels. They have to maintain control over everything they own, down to each and every use. Even if said control is both damaging and counter-productive.

Re: Shortsighted?

"isn't it the right of a property owner to act in ways that are shortsighted with regards to his property and his best interests?"

Nobody's saying they don't have that right. But, we also have the right to point out that they're being short-sighted and causing a lot of their own problems. This is just another of a long, long line of self-inflicted problems to bear in mind next time they whine that piracy is the cause of all their woes.

Re: Statutory v. actual damages

Well, they're supposed to be related to actual damages; that notion has a long history in tort law.

Got any cites to back up your claim, or are you just making-it-up-and-pretending-that-your-view-is-descriptive-of-the-actual-law again?

I presume Mike is referring to the Eight Circuit's statement in September in the Jammie Thomas case:

Thomas–Rasset's cross-appeal goes so far as to argue that any award of statutory damages would be unconstitutional, because even the minimum damages award of $750 per violation would be “wholly disproportioned to the offense” and thus unconstitutional. This is so, Thomas–Rasset argues, because the damages award is not based on any evidence of harm caused by her specific infringement, but rather reflects the harm caused by file-sharing in general. The district court similarly concluded that “statutory damages must still bear some relation to actual damages.” The Supreme Court in Williams, however, disagreed that the constitutional inquiry calls for a comparison of an award of statutory damages to actual damages caused by the violation. 251 U.S. at 66, 40 S.Ct. 71. Because the damages award “is imposed as a punishment for the violation of a public law, the Legislature may adjust its amount to the public wrong rather than the private injury, just as if it were going to the state.” Id. The protection of copyrights is a vindication of the public interest, *910 Sony Corp. of Am., 464 U.S. at 429, 104 S.Ct. 774, and statutory damages are “by definition a substitute for unproven or unprovable actual damages.” Cass Cnty. Music Co., 88 F.3d at 643. For copyright infringement, moreover, statutory damages are “designed to discourage wrongful conduct,” in addition to providing “restitution of profit and reparation for injury.” F.W. Woolworth Co. v. Contemporary Arts, 344 U.S. 228, 233, 73 S.Ct. 222, 97 L.Ed. 276 (1952).

Can you actually back up your position, or are you just making it up and pretending to know what you're talking about again? I know you'll deny that you're making shit up, but you and Mike and I all know that you're just a blowhard.

The ultimate question is whether a penalty of not less than fifty dollars and not more than three hundred dollars for the offense in question can be said to bring the provision prescribing it into conflict with the due process of law clause of the Fourteenth Amendment.

That this clause places a limitation upon the power of the States to prescribe penalties for violations of their laws has been fully recognized, but always with the express or tacit qualification that the States still possess a wide latitude of discretion in the matter and that their enactments transcend the limitation only where the penalty prescribed is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.

(Emphasis added.)

Perhaps the Eighth Circuit was being less than honest about Williams.

How does one decide whether the “penalty prescribed is ... wholly disproportioned to the offense”? Doesn't that call for comparison?

And is not the purpose of that comparison to determine whether the due process of law clause of the Fourteenth Amendment has been violated by the state?

But the argument may run that the Fourteenth Amendment does not bind the Federal authority. Yet is there not also a due process of law clause in the Fifth Amendment? And, indeed, was not the due process clause of the Fourteenth patterned after the due process clause of the Fifth?

Re: Re: Statutory v. actual damages

Got any cites to back up your claim

You don't have to search very far for a cite that backs up my claim:

This Court believes that statutory damages based on a single digit multiple of lost licensing revenues is a good starting point for calculating statutory damages. See generally Broadcast Music, Inc. v. Kiflit, 2012 U.S. Dist. LEXIS 142752 *11-12 (N.D. Ca., Oct. 2, 2012); New World Music Co. v. Tampa Bay Downs, Inc., 2009 U.S. Dist. LEXIS 1221*32 (M.D. Fla., Jan. 6, 2009) ("In keeping with the principle of awarding statutory damages to deter wrongful conduct, courts often award damages based on some multiple of unpaid licensing fees. [Citation omitted.] Awards of two to three times what the infringer would have paid for licensing fees are common."); see also Int'l Korwein Corp. v. Kowalczyk, 855 F. 2d 375, 383 (7th Cir. 1988).

- Peermusic, III, Ltd., et. al. v. LiveUniverse, Inc.

In case you're wondering: yes, that is the very case that this story is about, and the citation is from the ruling that is embedded above.

Re: Re: Re: Statutory v. actual damages

Perhaps the Eighth Circuit was being less than honest about Williams.

Back up a couple sentences:

Nor does giving the penalty to the aggrieved passenger require that it be confined or proportioned to his loss or damages; for, as it is imposed as a punishment for the violation of a public law, the Legislature may adjust its amount to the public wrong rather than the private injury, just as if it were going to the state.

251 U.S. at 66.

How does one decide whether the “penalty prescribed is ... wholly disproportioned to the offense”? Doesn't that call for comparison?

I think there's two issues. One is whether Congress can set statutory damages that aren't "confined or proportioned to his loss or damages." The other is whether the amount Congress set violates due process by being "wholly disproportioned to the offense and obviously unreasonable." Damages can be non-proportional to the harm done, but not so non-proportional as to violate due process. That's my read anyway.

But the argument may run that the Fourteenth Amendment does not bind the Federal authority. Yet is there not also a due process of law clause in the Fifth Amendment? And, indeed, was not the due process clause of the Fourteenth patterned after the due process clause of the Fifth?

Right. This would be the Fifth Amendment Due Process Clause, not the Fourteenth, since it's the federal Copyright Act. But the result would be the same under either clause.

Re: Re: Re: Statutory v. actual damages

You replied: "Well, they're supposed to be related to actual damages; that notion has a long history in tort law."

Do you have any cites from "tort law" (as opposed to copyright cases specifically, where you say "none of that seems to matter")?

And how do you square that with what the Eighth Circuit says about the damages award being punitive and for violation of the public wrong (rather than the private injury)? Neither of those factors considers the private injury.

Re: Re: Re: Re: Statutory v. actual damages

Damages can be non-proportional to the harm done, but not so non-proportional as to violate due process.

I think that's a sloppy and overly-facile analysis. A good-faith effort to apply the teaching of Williams would actually work through the problem.

First, punishments grossly disproportionate to the offense violate our most basic notions of fairness and justice.(*)

But, it is argued, the loss and damages to any one aggrieved person are not the true measure of the harm. True. The total harms are the sum of the harms to various individuals along with an unallocatable harm to all society at large. The total harm need not occur in strict ratio to the damage done to the plaintiff.

Yet still, that latter contention does not mean that one may dispense with attempting the summation, attempting to reckon the total. In weighing out the sum —reckoning the total— the first item set on the scales must be the actual damage done to the plaintiff. The ultimate damages may not be computed solely as cloud-stuff—dollar signs wispily plucked from the air. One must start the measurement with a hard look at facts.

(*) Justices Scalia and Thomas dissent from the thought that the Fourteenth Amendment's Due Process Clause is any sort of “a secret repository of substantive guarantees against ‘unfairness’.”

Re: Re: Re: Re: Re: Statutory v. actual damages

Good stuff. I think the problem though is that it's next to impossible, if not impossible, to actually measure the harm. That's why courts like rules of thumb such as triple what a license would have cost.

Re: Re: Shortsighted?

especially since the lyrics alone, divorced from the music, have no value in the marketplace

Except that the lyrics do have value in the marketplace, even if it's not a direct monetary value. Many of the major sites that present these lyrics would not exist if it weren't for the marketplace value of the lyrics. The value to these sites of the lyrics is your attention and possibly a click on one or more sponsored adds.

Don't assume that the only value something has is the direct dollar value of that item.

Re: Re: Re: Shortsighted?

Re: it has a long term strategy

Maybe that's proof that the jackasses running these companies really don't know what they're doing, they've driven said companies into the ground, and they're scrambling to keep their jobs by appearing to do something to "stave off the flood of PIRACY!!!", while in actuallity just bringing in money to pad their bonuses and get them out the door before the whole house of cards comes falling down around their ears.

Yeah, it's this sort of shit that going to "business school" gets you...

A nickel for your "lyrics"

Should lyrics be copyrightable at all? Probably not. But if so, for how long? Granted that Ira Gershwin's lyrics were clever, as were Yip Harburg's (Wizard of Oz), but should they still be locked down by copyright in year 2012? Emphatically not. Should Hal David's family still be getting royalties for performances of stuff from the '60s?

Should Stephen Sondheim's prolific body of work have been copyrightable? Those works are massive like opera librettos. To the extent that he gets paid when his plays are mounted, he benefits. Do his old works still need to be locked down? Who benefits from that?

I maintain that such creators as the above don't need copyright "protections" for very long because they will always move forward & dream up new stuff, whether or not someone comes along later & "steals" the old stuff. Copyrights spawn paywalls & tollbooths & an awful sense of entitlement amongst content owners. Greed encourages creators to discourage the salubrious propagation of their own output in favor of monetary profit for their estates.

And how do you square that with what the Eighth Circuit says about the damages award being punitive and for violation of the public wrong (rather than the private injury)?

As I said, in general, putative damages should not be wholly disproportionate to the actual damages incurred. And in the Thomas-Rassett case, the award was, without question, grossly excessive. It was far, far higher than the award this court said was the norm for copyright infringement (a single-digit multiple of actual damages). And it was definitely far higher than the maximum award for patent infringement (treble damages). It was also far, far higher than the unconstitutionally excessive putative damages in BMW.

Whether the award is unconstitutionally excessive is a different matter. It's possible for a jury-determined damage award to be unjustly excessive without being unconstitutional. If it's not unconstitutional, then courts really don't have much say in the matter.

Abstract:
The Supreme Court, in a line of several cases over the past decade, has established a rigorous federal constitutional excessiveness review for punitive damages awards based on the Due Process Clause. As a matter of substantive due process, says the Court, punitive awards must be evaluated by three guideposts set forth in BMW of North America v. Gore . . . .

This Article reveals the defectiveness of this jurisprudence by exposing the absence of precedential foundation for the Court's current view. . . .